Leaders in life sciences and pharmaceutical companies are under continued pressure to justify their investment in R&D as we are in a time of rising costs, drug failures and many major patents are expiring with few new drugs to replace them.

It is no secret that every big pharmaceutical company is struggling to transform R&D in the wake of this infamous patent cliff and the accompanying pipeline problems. But how have they been faring? As a new report by Deloitte and Thomson Reuters suggests – not so well. Of a dozen big companies analysed (Pfizer, Roche, Novartis, Sanofi, Amgen, GlaxoSmithKline, Johnson & Johnson, AstraZeneca, Merck, Eli Lilly, Bristol-Myers Squibb and Takeda), 10 showed a decline of nearly 29% in their internal rate of return on R&D.

Specifically, the internal rate of return on R&D fell to 8.4% this year from 11.8% in 2010. Meanwhile, the average cost of successfully bringing a drug to market rose by more than 25%, from $830 million in 2010 to $1.05 billion in 2011, although there was a wide variation among companies, ranging from $439 million to $2.5 billion.  Also the average of late-stage compounds in development fell as the cost of developing each compound rose, on average, by 25%.

On a more positive note the report also found that costs unrelated to R&D declined in 10 of the 12 companies, and nearly two-thirds succeeded in realising more value from product commercialisation than had been lost from late stage product failures.

With these facts pharmaceutical companies must do everything they can to accelerate research, whilst at the same time ensuring that the decision to stop the development of unsuccessful compounds is made earlier, to improve confidence and enhance cost-effective decision-making.  R&D applications need to be compatible to allow automation and data on pre-clinical studies and clinical trials to be shared more effectively between the lab and the clinic and equally between organisations.  IT solutions that deliver effective knowledge sharing, reducing delays and cost are required.

Surely the pharmaceutical sector must do more to work together and share the science behind failed compounds to improve success rates and bring down the cost of developing new drugs.  Their success depends on connecting people together at the right time to speed up decision making and avoid time and money spent on development of compounds found ineffective in previous studies.

Successful collaboration can achieve this.